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The Integrity of Political Finance Systems in Asia: Tackling Political Corruption

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The Integrity of Political Finance Systems in Asia: Tackling Political Corruption The Integrity of Political Finance Systems in Asia: Tackling Political Corruption International IDEA Policy Paper No. 19 Erik Mobrand, Fernando Casal Bértoa and Yukihiko Hamada © 2019 International Institute for Democracy and Electoral Assistance This paper is independent of specific national or political interests. Views expressed in this paper do not necessarily represent the views of International IDEA, its Board or its Council members. The electronic version of this publication is available under a Creative Commons Attribute-NonCommercial-ShareAlike 3.0 (CC BY-NC-SA 3.0) licence. You are free to copy, distribute and transmit the publication as well as to remix and adapt it, provided it is only for non-commercial purposes, that you appropriately attribute the publication, and that you distribute it under an identical licence. For more information on this licence visit the Creative Commons website: <http://creativecommons.org/licenses/by-nc-sa/3.0/>. International IDEA Strömsborg SE–103 34 Stockholm Sweden Telephone: +46 8 698 37 00 Email: [email protected] Website: <http://www.idea.int> Design and layout: International IDEA DOI: <https://doi.org/10.31752/idea.2019.22> ISBN: 978-91-7671-253-5 Created with Booktype: <https://www.booktype.pro> International IDEA Contents Acknowledgements ....................................................................................................................... 5 Key recommendations .................................................................................................................. 6 Executive summary ....................................................................................................................... 7 1. Introduction ............................................................................................................................... 8 2. Political finance challenges in the region ............................................................................ 10 3. Main trends and emerging issues ......................................................................................... 14 4. Lessons learned on the effectiveness of regulation ........................................................... 25 5. Areas for improvement ........................................................................................................... 31 6. Recommendations .................................................................................................................. 32 References ................................................................................................................................... 34 Further reading ............................................................................................................................ 39 About the authors ....................................................................................................................... 41 About the organizations ............................................................................................................. 42 Annex ............................................................................................................................................ 44 Acknowledgements Acknowledgements This policy paper was drafted by Erik Mobrand and Fernando Casal Bértoa under the coordination and guidance of Yukihiko Hamada, Senior Programme Officer, International IDEA. Editorial support and administrative assistance were provided by Jenefrieda Isberg and Alexandra Cooper. Data collection and validation were carried out by Seksan Anantasirikiat, Jeremy Lim, Crystal Huang, Nyi Nyi Kyaw, Muhammad Hassan Wafaey, Lhawang Ugyel, Thoiba Saeedh, Filippo Boni, Chirayu Thakkar, Dishil Shrimankar and Khurram Siddiqui. Valuable comments were also provided by Adhy Aman, Rumbidzai Kandawasvika-Nhundu, Keboitse Machangana and Leena Rikkilä Tamang. International IDEA 5 The Integrity of Political Finance Systems in Asia: Tackling Political Corruption Key recommendations 1. Conduct periodic assessments of political finance regulations to ensure their relevance and effectiveness to mitigate the risk of corruption. 2. Expand efforts to record and disclose parties’ financial activities. Financial reports should be independently audited and made available in a timely manner, especially during election campaigns. Consider developing an online platform for political finance reporting and disclosure. 3. Introduce public subsidies to political parties, especially to fund their ordinary activities. Also ensure the distribution criteria are fair and reasonable in order to level the political playing field. 4. Earmark a proportion of public subsidies to promote the participation of women in politics. Additional subsidies could be channelled to promote the participation of youth and for educational or research purposes. 5. Place reasonable regulations on donations from legal persons and consider caps on party spending. Ensure that proper measures are in place to calculate these spending caps. 6. Provide trainings for political parties in complying with political finance regulations. 7. Give oversight authorities, particularly those in charge of auditing financial reports, independence and sufficient capacities to conduct meaningful investigations and apply sanctions. 6 International IDEA Executive summary Executive summary Enhancing the integrity of political finance systems is one of the main ways to address political corruption. While political parties and election campaigns require funds to enable democratic political participation and representation, an ineffectively regulated flow of money in politics can also lead to political corruption and damage public trust in political processes and institutions. In Asia, the comprehensiveness of political finance systems and the level of implementation vary significantly across countries. This policy paper draws on the 2018 data of the International Institute for Democracy and Electoral Assistance (International IDEA) Political Finance Database and covers South Asia, South East Asia and East Asia. It investigates three key questions: What are the main corruption risks associated with the funding of political parties and election campaigns in Asian countries? What types of political finance regimes do those countries have? And, why do these regimes fail to tackle the risk of corruption? The resulting analysis highlights that political finance systems in Asia are often influenced by the intertwined nature of business–government relationships, political parties’ informal bookkeeping practices, unrealistic regulations, and procedures and regulations that favour the ruling parties. In order to safeguard the integrity of political finance systems in Asia, this policy paper stresses that any meaningful political finance reforms should involve multiple stakeholders, including civil society organizations, and be tailored to the local context such as the traditional business culture and informal practices embedded in the society. Reforms should ensure that both ruling and opposition parties enjoy fair access to funding. In addition, the region is weak in promoting gender-based access to political funding and struggles to implement regulations at the local level. Moving forward, countries in the region should adopt realistic and comprehensive strategies to update their political finance systems, especially through framing the impact of private funding by providing public funding and strengthening parties’ capacity to comply with the political finance regulations. International IDEA 7 The Integrity of Political Finance Systems in Asia: Tackling Political Corruption 1. Introduction While money enables the expression of political support as well as competition in politics and elections, poorly regulated political finance regimes can undermine the integrity of processes and institutions of political participation and representation, resulting in corruption and a loss of public trust in politics. Asia—defined here to include South Asia, South East Asia and East Asia—is a diverse region with a range of challenges relating to transparency and the fair funding of parties. In some countries, regulations are strongly articulated on paper, but are poorly implemented. Other countries may have no effective regulations. In some countries the regulations are enforced, but only to enable a dominant party to block potential rivals. In such cases political finance practices often diverge sharply from their intended purpose. Asia is home to democracies, hybrid regimes and non-democracies. It has exceptionally diverse levels of socio-economic development, encompassing both highly impoverished regions and affluent, fast-growing states. The countries included in the report have conducted multiparty elections in recent years. In some cases, such as Pakistan and Thailand, periods of civilian government have been interrupted by military rule. In other cases, such as Cambodia, multiparty elections have only recently collapsed. Moving in the opposite direction, in 2018 Malaysia experienced its first post-independence change of ruling party after it began transitioning from military rule in 2010. Although initially lauded, the post-transition government has garnered great criticism since then. In the aftermath of the country’s civil conflict in 2017, party leaders were criticized for taking an ultimately passive role in the crisis (Holliday and Roman 2018). Some countries, such as Indonesia, South Korea and India, have had multiple peaceful transfers of
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